Brussels, 22 December 2011 - 1 January 2002 marked the introduction of euro notes and coins in the European Union, ushering in an unprecedented alignment of monetary policies and closer cooperation between countries of the euro area. Whilst the euro and Economic and Monetary Union provided a sound basis for economic progress, the banking crisis of 2008 and its consequences have tested the system to the full. The success of the euro has proven to be dependent on sound and sustainable public finances and robust macroeconomic policies. The basis for recovery already exists with the recently strengthened EU rules on economic governance and surveillance. It is being further reinforced through a 'Fiscal Compact' agreed by EU leaders in the pursuit of budgetary discipline and reinforced economic policy coordination and governance throughout the eurozone.

In the pre-crisis period, the euro area as a whole benefitted from macroeconomic stability with stable inflation, low interest rates, an exceptionally long period of economic growth and a stronger internal market. The 332 million people who use the euro no longer have to pay extra costs to exchange currencies and there is more transparency in cross-border transactions, enabling consumers to compare prices between one eurozone country and another.

European Commission Vice-President for Economic and Monetary Affairs and the Euro, Olli Rehn, said, "against the backdrop of today's economic fragility, this is an opportune moment to recall the fundamental principles on which the euro was built and bring about a return to a Europe of strength and opportunity. We have the bricks and mortar; we have the manpower. We now look forward to political will, strong determination and swift action to restore economic growth, and create more jobs and restore confidence in investors and the public."

Background

Before joining the euro, without exception, all potential member countries are required to adhere to strict economic and monetary criteria in order to maintain budgetary discipline. The euro drew Member States towards closer cooperation for the common aim of a stable currency and economy that would benefit us all. Before the banking crisis struck in 2008, the European Union was on track to achieving these goals.

Nevertheless, inside the euro area, fiscal and macroeconomic imbalances built up over the decade. Addressing these imbalances in the EU has required immense efforts by the public sector to protect the interests of governments, businesses and citizens throughout the EU. Without the Economic and Monetary Union, the global financial crisis would have unleashed a series of devastating currency crises in Europe. The effect on economies, governments, businesses and even people's everyday lives would have been unimaginable.

The fundamental purpose of economic and monetary union and the euro was - and still is - to allow the European economy to function better, create more jobs and a better life for Europeans. The euro is not just a technical monetary arrangement, but a symbol for the determination to work together in a spirit of solidarity.

The euro does not bring economic stability and growth on its own. First, this is achieved through the sound management of the euro-area economy under the rules of the EU Treaty and the Stability and Growth Pact (SGP), a central cog in the wheel of Economic and Monetary Union (EMU).

Second, the euro as the currency of the European Union is the key mechanism for enhancing the benefits of the single market, trade policy and political co-operation.

The SGP has just been strengthened through the 'six-pack' set of rules which entered into force in the EU on 13 December 2011. These new instruments will help ensure, now more than ever, that everyone sticks to the jointly agreed rules, and will therefore significantly help stabilise the EU economy and prevent a new crisis from occurring again. This set of tools includes fiscal rules and a new emphasis on reducing high levels of debt, backed up by a credible sanctions mechanism, and an effective framework to prevent and address broader macroeconomic imbalances.

This major milestone was made just days after the European Council of 9 December, which EU leaders took courageous decisions to strengthen the credibility of our crisis response, both as regards further reinforcement of economic governance towards a new fiscal compact – and strengthening the financial firewalls to contain the contagion and ultimately protect economic growth and jobs.